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MINDING OUR OWN BUSINESS February 15, 2003 by Linda Hirvonen Delta County EDA With an American war against Iraq looming near, businesses should prepare for what impacts a war are likely to have. The Kiplinger Letter of January 31 addressed some of the issues they expect will affect business. Here are some of their ideas to test against your own list of what your business might need to do to prepare for the unintended consequences of war. Gas prices went up ten cents between Saturday and Sunday of last weekend. It is no surprise that Kiplinger predicts energy costs will spiral during a war. Their predictions are for crude oil to jump to $50 a barrel, gas/fuel/heating oil to $2 a gallon, and natural gas and propane to increase as well. Higher energy costs will increase shipping fees, having a tremendous effect on rural communities like ours. Kiplinger expects national and regional trucking firms, and UPS FedEx type services to double their fuel surcharges from 3.5% to 7%. Unfortunately, smaller independent carriers won’t have the luxury of being able to increase their charges. This is a danger both for their survival as well as for those who rely on their services. The value of the US dollar has been strong, helping some business but negatively affecting others. Its weakening has been helpful for industries like forest products and paper. Kiplinger predicts that the dollar will stay weak for whatever the war’s duration but will “rally afterward.” They suggest that importers can benefit by delaying purchases while exporters should try to land contracts now before the value of the dollar increases. Exporters and importers will encounter even more delays at borders and harbors. Also of concern may be the numbers of military ships at key cargo ports like Los Angeles, Long Beach, New York City, Norfolk etc. Their presence will further slow shipments in and out. Business of all sizes will see a skills drain as trained and skilled employees who are members of the reserves or national guard are called to duty. Cross training now is important if it has not already happened! Cash flow will also be affected as employers must continue health insurance coverages for 30 days after deployment. Businesses must also guarantee jobs and pay status upon employees’ returns. Those who make parts for the military will find the military’s tendency to stockpile will boost sales, but working with the military is never easy. Businesses should remember that Delta County is a HUB Zone (Historically Underutilized Business Zone). This gives us a 10% price advantage over other bidders on government contracts. To find out more about HUB zones, visit www.sba.gov/hubzone. Visit http://pronet.sba.gov and follow the directions to register your business for selling to the government if you have not already done so. There is also an extension of PRO-Net called SUB Net that allows primary contractors to post subcontracting opportunities. Go to the PRO Net home page and choose “Subcontracting Opportunities” side bar. To find out more about defense purchasing, check out the Defense Logistics Agency’s website at www.dla.mil. Wars are difficult for everyone- soldiers, civilians, business and government. With the personal effects on family, confidence in purchases, stability of the stock market, and so forth, it will not be an easy time. But preparedness is the key to minimizing at least some of the more controllable negative impacts. In your planning processes for 2003, please consider your emergency response plan for if and when our country goes to war. |
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